Sokol Sees Apollo-Like Investment
By Ann Thelen
In 2000, David L. Sokol engineered the reversal of a traditional strategy in the energy industry and accelerated growth for MidAmerican Energy Holdings Company: he took the publicly held company private and was nominated to the Class of 2001.
It was the second consecutive year that MidAmerican had set an industry precedent. In 1999, the company became the first independent power producer to acquire an investor-owned utility. In this transaction, Sokol, then chairman and CEO of MidAmerican, put his personal funds upfront in organizing a small group of investors to buy all the company’s shares. He chose the innovative course of privatization to overcome industry-wide stagnation in market value for utilities during a period of great opportunity.
He created a premier vehicle with a long-term perspective and access to a vast pool of private capital, freeing MidAmerican from the short-term pressures of Wall Street and giving it critical stability to lead change.
In addition to Sokol, who today serves as chairman of the board of MidAmerican Energy Holdings Company, other investors include Walter Scott, Jr., MidAmerican’s largest individual shareholder; Gregory E. Abel, the company’s president and chief executive officer; and Berkshire Hathaway, Inc., headed by investor Warren Buffett.
Sokol has a history of leading growth in the industry. When he joined CalEnergy as chief executive in February 1991, the company had one customer and owned and operated one geothermal project. The previous year, the company had less than $100 million in revenues.
By the end of 1999, CalEnergy had become MidAmerican, and its revenues had grown to $4.1 billion. By the end of 2007, MidAmerican’s revenues had tripled to $12.4 billion.
Today, MidAmerican, based in Des Moines, Iowa, is a global provider of energy services. Through its energy-related business platforms, MidAmerican provides electric and natural gas service to nearly 7 million customers worldwide.
The company has 17,246 employees and approximately 21,177 megawatts of diversified power generation under ownership, contract and in operation, construction and advanced development. MidAmerican is No. 1 in the nation in ownership of wind generation among regulated utilities.
To achieve significant carbon emissions reductions by 2050, MidAmerican believes a significant investment must be made in research and development. Sokol introduced the concept of the need for an Apollo-like investment regarding climate change in June, 2007. The costs of achieving carbon reduction goals must be balanced with the economic impact on energy users.
MidAmerican already is an industry leader in actions that reduce greenhouse gas emissions. At the end of 2008, 5,228 megawatts, or 24.5 percent, of Mid-American’s energy generation capacity will come from renewable and noncarbon fuel sources. At press time, MidAmerican announced plans to takeover Constellation Energy Group.